Crypto’s venture capital funding for startups has yet to recover in line with the clarity of recent US regulations, despite showing signs of recovery in months after President Donald Trump’s election.
According to analysts, Excessive capital inflows in 2021 and 2022 did not produce proportional returns to investors, undermining confidence and lowering VC money inflows.
Amazing performance
Tom Dunleavy, MV Global Partner I said The crypto industry has raised excessive capital compared to the number of high quality projects.
He said the venture companies optimized for the profits of short-term tokens, rather than promoting long-term business in emerging sectors.
Dunleavy has been added:
“There’s a very clear long-term trajectory in the industry, so we should see the 21/22 type rise today, but the daily mark on market price action has ruined the emotions.”
Crypto Startups’ average monthly VC funding was $3 billion in 2021, but the following year reduced its nearly 50% to $1.888 billion. This trend recorded just $81 million in 2024.
In particular, in December 2024, the amount of VCS invested in Crypto companies exceeded $1 billion for the first time since April of the same year.
Since then, the threshold has been consistently crossed, raising $1.2 billion in January and $1 billion last month. However, growth remains stunted, given the improvement in the US regulatory environment.
Failed projects and investor skepticism
Mickey Hardy, chairman of Arcadia echo The Dunleavy rating highlights that many projects funded during the peak fundraising period are no longer operational and are suddenly stopped.
Past failures have amplified skepticism about the viability of new crypto startups, leading to increased attention among investors.
However, Hardy said he believes that if the market stabilizes, venture capital activities will resume and points out that Bitcoin (BTC) has strengthened its position as a recognized asset.
Dunleevi also admitted that there could be a return of funding, but there was a significant delay. Regulatory improvements provide a structured environment for the crypto business, but investors’ sentiment remains curtailed due to previous losses and changes in risk appetite.
